How to choose the right optimization strategy for Performance campaigns: CPA vs. ROAS

When setting up your Performance campaigns in Yango Ads Space, selecting the right optimization strategy — either Cost Per Acquisition (CPA) or Return on Ad Spend (ROAS) — is crucial to achieving your business goals.

Understanding CPA and ROAS

Segment

Definition

Calculation

Ideal scenarios

CPA (Cost Per Acquisition)

Focuses on achieving a specific cost per conversion, ensuring predictable spending.

CPA = Total Cost+ Total Conversions

Best when basket values are consistent, or you aim to manage specific acquisition costs tightly.

ROAS (Return On Ad Spend)

Targets revenue return relative to ad spend, optimizing towards profitability and growth.

ROAS = Total Revenue + Total Cost

Ideal when average order values vary significantly, or revenue growth is a primary objective.

Selecting and adjusting your targets

Start with benchmarks:
- Review your historical CPA or ROAS performance data from other paid marketing channels.
Segment by user type (if using User Segments):
- Apply benchmark CPA or ROAS values specifically to your Buyer segments.
Adapt targets for challenging segments (if using User Segments):
- For Non-buyers and New users, adjust your CPA or ROAS targets accordingly, considering their higher acquisition costs. Typically, reduce your ROAS target or increase your CPA target for these segments:
  - Non-buyers: adjust CPA upward or ROAS downward by 30-60%
  - New users: adjust CPA upward or ROAS downward by 50-80%

How billing works

With both ROAS and CPA strategies, billing is calculated per conversion:

If you use a ROAS strategy and receive a $100 purchase with a ROAS of 5, you'll be billed: $100 + 5 = $20.
If you use a CPA strategy and receive a $100 purchase with a CPA of $20, you'll be billed: $20.

Reach out to your Account Manager for personalized guidance in selecting and optimizing your CPA or ROAS targets.